Librarians and the terrible fix: economics of the Big Deal
The academic journal market is characterized by delegated purchasing, unreliable signals of demand, and a complex, difficult-to-evaluate product. As a result, the demand for journals is highly inelastic to prices. Large commercial publishers have capitalized on this inelastic demand, by reducing competition through mergers and consolidations, by offering Big Deal bundled contracts, and raising their prices to levels far above average cost. We suggest that the demand for access to journal articles would be much more price elastic and the overall cost to the academic community would be lower if universities were to abstain from purchasing bundled site licenses at prices that greatly exceed average cost. So long as other libraries continue to purchase site licenses at inflated prices, a single university library cannot expect the price structure to change if it drops its Big Deal contract. Some libraries have, however, succeeded in saving significant amounts of money by means of hard bargaining. Others such as Stanford and California Institute of Technology have saved even more by eschewing bundled contracts and subscribing to only the most cost-effective single journals.
Ted C. Bergstrom. "Librarians and the terrible fix: economics of the Big Deal" Serials 23.2 (2010): 77-82.
Available at: http://works.bepress.com/ted_bergstrom/111